What's behind big ticket prices

It's not just inflation. Rock stars and ball players earn more than ever, while new roller-coasters require billions to build.

July 15, 2002

By Noel C. PaulStaff writer of The Christian Science Monitor

Rituals of relaxation in America are taxing consumers' pocketbooks more than ever before. Despite the shaky economy, the cost of summer entertainment continues to rise.

The uptick is evident from movie theaters, where the average ticket price ($5.85) has jumped 3.5 percent this year, to Broadway theaters, where the top price for a musical ($100) has risen $10 since last summer.

Many experts credit the rising prices  which, in many cases, exceed inflation  to the bounty of disposable cash held by many baby boomers, some of whom are now prioritizing leisure after decades of putting work first.

Higher prices are yielding larger profits. But not all fans are taking the hikes in stride. Attendance is flagging at many events as consumers grow more sensitive to skyrocketing ticket prices.

A close look at the cost of three summer entertainment options  rock concerts, baseball games, and amusement parks  reveals a variety of causes for the price boom.

With concerts and baseball, price pressures result partly from performers' rising salaries. Growing construction and insurance costs represent one reason for the boost in amusement-park fees.

None of the industries, however, base ticket prices solely on their own expenses. Price tags are set according to what people are willing to pay.

Price hikes are easier to carry out in entertainment industries, say experts, because consumers are not as cost-sensitive and competition is minimal.

"A handful of suppliers dominate these industries," says Elise Prosser, a professor of entertainment marketing at the University of San Diego. "When one company like Disney raises its prices, all the amusement parks ratchet them up...."

Facing the music

In 1975, Gail Lourenco paid $7.50 to see Sonny and Cher perform. Last week, the Warwick, R.I., housewife shelled out $55 to watch Cher in concert in Boston.

Ms. Lourenco is not dismayed by the jump in price. "Like everything else, you have to pick and choose your favorites now," says Lourenco, who goes only to a concert about once every three years.

Still, she believes that $55 seems a bit steep. Adjusted for inflation, her 1975 ticket would now cost $25.90. Sonny and Cher, she says, were no less popular in 1975 than Cher is today.

Experts point to the mid-1990s as a turning point for ticket pricing. Top bands watched as fans began paying scalpers hundreds more than face value for top seats. Many bands reacted by raising prices 100 percent and more.

The average ticket price for the top 50 concerts this year is $50.81, about double the average of a decade earlier, according to music-industry research firm Pollstar.

For the most part, fans have kept buying. The Rolling Stones, for example, are charging between $50 and $100 for mediocre seats for their 32-stop world tour this fall. The cost of front row seats: $350. Most shows are already sold out.

Performers themselves receive about 60 percent of ticket proceeds. From that they pay lodging and catering expenses, the salaries of between 40 and 50 crew members, and maintain a fleet of trucks. Overhead costs have grown over the past five years as concerts have become more sophisticated. Top bands now transport two or three stages, pyrotechnic and video projection equipment, and moving lights.

Venue rental fees eat up the second largest chunk of ticket revenue. Stadiums and amphitheaters will ask for either a set fee or about 15 percent of ticket sales. The fee is often smaller during the summer, when bands face less competition from sports teams.

Elite performers receive special breaks. "If you're Madonna and you're only going to play eight cities, you have venues bending over backwards trying to entice you to play their place," says Gary Bongiovanni, editor of Pollstar. He says some stadiums may not have even charged Barbra Streisand on her last tour.

A local promoter is responsible for renting the building, advertising, hiring the crew, and paying the artist. His salary is not guaranteed and depends entirely on ticket sales. Advertising and building staff expenses  from stagehands and ticket-takers to security and fire-department personnel  account for remaining costs.

While Pollstar expects concert revenues to reach record levels this year, attendance may flag. About 10.6 million people have attended concerts in the US this year  a 300,000 drop compared with last year.

He stops outside Gate C, the ballpark's center-field wall, and embraces the red-brick facade. His affection for the park supersedes his distaste for team management of the Boston Red Sox, which now charges the highest average ticket price in baseball at $39.68  $15 more than the second-highest average ticket.

"If a dad wants to bring [his] kids to a game, he has to pay $100 to get in the door and a hot dog requires a credit check," says Raymond, sarcastically.

The average ticket price in Major League Baseball increased about 4 percent this year to $18.31, according to Team Marketing Report, a Chicago-based sports-marketing firm.

Like many fans, Raymond attributes the high ticket cost to the Red Sox payroll. "What they are paid affects what we pay to see them play," he says.

Most of each ticket price goes for players' salaries. But prices are generally not lowered or raised to adjust to the team's payroll. "They're going to raise prices according to demand," says Andrew Zimbalist, an economist at Smith College in Northampton, Mass., and author of the book "Baseball and Billions."

Baseball teams have more flexibility in ticket pricing compared with music concerts and amusement parks. Each team receives a large chunk of revenue from other sources. The league's national radio and television contracts last year guaranteed $15 million all but two teams.

Revenue from local media contracts ranged widely, from the Expos' $536,000 to the Yankees' $57 million.

Teams can also lease naming rights for their stadium. The Houston Astros, for example, recently accepted a $100 million bid to name its stadium Minute Maid Park for the next 28 years.

But ticket prices are kept in check because teams have an incentive to bring in as many fans as possible. Higher attendance boosts concession sales and in-park advertising rates. In addition, a filled stadium can influence TV viewers to believe that a ticket is a hot item, encouraging broader attendance, says Mr. Zimbalist.

Only two teams  the Red Sox and the San Francisco Giants  own their stadiums, but most teams' costs are minimal, since cities keep rental fees low.

Major League Baseball justifies rising prices by claiming that most teams have lost money over the past five years. Last year, however, 21 of the 30 teams earned a profit, according to Forbes Magazine.

Fans may be flinching at the rising costs. Attendance is down 6 percent.

Taken for a ride?

Sandy Moriarty pauses in the parking lot of Six Flags New England in Agawam, Mass. She listens to familiar sounds of summer: A parking attendant's orange flag slaps the heavy, humid air; car tires roll over gravel; squeals rise from kids amid the jumble of fluorescent tubes and white scaffolding in the distance.

Ms. Moriarty did not expect to be at a Six Flags park this summer. The entrance fee is $40 a head  well over what she is willing to pay for herself and two children.

Her family spent hours scanning soda cans and Internet sites for coupons. They finally uncovered a $17 per-ticket credit through AAA. "I was surprised we were able to bring four for under $100," says the Cleveland, Tenn., homemaker.

The gate price at US amusement parks has been rising steadily for a decade. The average price this year: $34.40  up 91 cents from the previous year.

Parks have raised prices in part to pay for new rides. Construction accounts for one of their top expenses  between $5 billion to $8 billion per ride.

"People want bigger and better attractions," says Tim O'Brien, parks and attraction editor of Amusement Business magazine. "The engineering and high-tech nature of these new rides are costing a lot more money than they used to."

Other costs have remained relatively stable. Labor is the top expense. Six Flags employed about 3,000 full-time workers last year. It also hired 44,000 seasonal workers, helping to hold wages down.

Marketing costs rank second. Parks spend millions in order to make discounts widely available. Traditionally, only two-thirds of park users take advantage of discounts. That number will rise this summer, experts say, as parks offer more deals to attract penny-pinchers.

The parks' insurance costs have soared this year because of concern that terrorists may target large public venues, according to Dennis Speigel, president of International Theme Park Services, a Cincinnati-based consultancy.

Mr. Speigel believes prices may be nearing a ceiling. "Our attendance has been very flat the last decade as prices have risen."

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